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The Genesis Of AirBnB


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Joe Gebbia and Brian  Chesky were friends from Rhode Island School of Design.In 2006,Joe asked Brian to move to San Francisco to start something.Unfortunately by October 2007,even as the duo had nearly run through their meagre savings,their landlord hiked the rent by 25%.Their situation was bad.They had no money to pay the next month’s rent.They did not even have an idea for a business.

The Industrial Design Society of America holds a specialized conference around the world once in 20 years.They picked San Francisco in 2007.The week Joe read the landlords missive with a sense of impending doom,San Francisco was abuzz with an acute shortage of hotel rooms for the IDSA conference.They rented out space in their living room that weekend.Joe coded and put up a small website advertising their living room.For $80,a person got a room,airport pickup and breakfast.As Brian and Joe pulled out three airbeds from storage to accommodate their guests, they named their service AirBnB.

That weekend,Brian and Joe had the time of their lives with their guests.They went to the conference,took their guests  to their friend’s parties and to local cafes .These three guests (including a 32-year-old Indian design student,Amol Surve) wrote to Brian and Joe and urged them to turn their idea into something.They wanted a repeat experience.They were going to London next and wanted to know whether Brian and Joe knew anybody there who was offering space similarly.

When Brian and Joe decided to turn the idea into a larger service,they needed a serious tech hand.Brian asked Joe if he knew anyone who could handle the tech side.Joe suggested his previous flatmate Nathan Blecharczyk who was in the same computer science class at Harvard University that Facebook founder Mark Zuckerberg dropped out of.As it happened,Nathan was in San Francisco and had quit his job two weeks before.The website they built together came to national attention in August 2008,when 100,000 people landed up in Denver,Colorado,for the Democratic National Convention where Senator Barack Obama accepted the party nomination as its presidential candidate.Denver only had 30,000 hotel rooms.When Democrats started using AirBnB to host other Democrats,it became a story.First it was a story in Denver,then CNN called,then the New York Times,and then The Guardian from London.They were suddenly talked about!

But the euphoria was short-lived  After a spurt of activity,growth plateaued.The website stagnated at weekly revenue of $200.At this point,Brian,Joe and Nathan  were surviving on their credit cards.The turning point came when YCombinator,the startup accelerator run by tech evangelist Paul Graham (an alumnus of both Harvard and Rhode Island School of Design) picked AirBnB among 16 companies from 1,500 applicants.The competition was tougher than getting into Harvard.The AirBnB team then changed strategy to focus on one city and they picked New York.When they had 50 listings in New York,Graham told them to go and meet with all 50 of their users.They were skeptical.They wondered how they could  scale up if they spent all their time meeting each of their users.But Graham told them they didn’t have to scale.He told them to get to know their early adapters closely.

People were putting up grainy pictures of their apartments on AirBnB. So Joe and Brian went door-to-door in Brooklyn and Manhattan,clicked pictures with a high-end camera they rented and helped listers make their properties more appealing.When the listers invited them to have coffee with them,they sat with them to understand how the website and its features were being used.Then they figured out that many of their features were being used in ways that were not intended.This feedback proved invaluable.Back in San Francisco,Nathan tweaked the site with this feedback.

As they persisted with this process,the team noticed a curious thing.Revenue started doubling each week.They not only met their goals,but exceeded them each week by doing something that couldn’t scale.When they changed their site as per their user’s need,they loved it.They told their friends and families.The word spread. Listings in New York grew rapidly.People travelling to the city from Seoul,Paris,Shanghai,Delhi and Miami all started booking AirBnB properties.They went back and listed their properties on AirBnB. The network effect just took over and AirBnB entered a period of  hyper growth.Their company was valued  at nearly $1.3 billion in July 2011, less than four years from that cold and difficult weekend in October 2007.

Also in July 2011,the company found itself in a media firestorm after a woman alleged that her apartment was ransacked by an AirBnB renter and that the company tried to shut her up when she blogged about the experience. AirBnB apologized after weeks of harsh media scrutiny and introduced a $50,000 protection guarantee to hosts. The company worked extensively to improve trust and safety.A former military intelligence officer now heads the company’s security division that routinely weeds out accounts carrying out suspicious activity.The AirBnB ecosystem offers various trust devices :whether a renter and a host have common friends,whether friends have hosted a user or stayed at a property previously or whether they have common alumni networks.

AirBnB is now one of the worlds hottest start-ups.It has more than 200,000 listings in 192 countries and has done more than 10 million bookings.From tiny spaces with little more than a couch,to private islands,tree houses,houseboats,igloos and palaces in Rajasthan, AirBnB has opened up extraordinary variety of hospitality experiences rooted in local cultures.Users who experience AirBnB and the kindness of strangers integral to it,are loath to go back to the tyranny of the standardized hotel room.There are more than 4,500 listings in India now and the figure is growing daily.

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About Keerthika Singaravel
Engineer,Investor,Businessperson

3 Responses to The Genesis Of AirBnB

  1. Pingback: AirBnB: Cutting Costs with an Alternative to San Juan Hotels

  2. Alex Jones says:

    I like this case studies.

    • I’ll be happy to do more of these.
      Thanks for the feedback.

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